10 things not to do when dealing with China

by Maarten Swemmer Leave a reply »
The Chinese market is unique

The Chinese market is unique

Hong Kong television station Pearl showed an insightful lecture by a J Walter Thompson consultant about marketing in China. Most important lessons: traditional marketing principles don’t work and don’t listen too much to Chinese experts.

Here’s his list of “10 commandments”, as he called it, which I enriched with some examples:

  1. Don’t take your CEO to dinner in a rich neighborhood of Shanghai
    China is not as rich as it would seem. Most of China is actually still poor (7518 USD GDP per capita), not like Hong Kong, Singapore and Taiwan. You (and your CEO), should take that into account when dealing with the Chinese market.
  2. Don’t get your name wrong
    You have some control over what your brand means in Chinese (Mandarin or Cantonese). You can use direct translation, transliteration or give it a great meaning. Google kind of failed here. It sounds like “valley song”, which is more or less meaningless. BMW (宝马 Bǎomǎ) meaning Treasure Horse and Coca-cola (- 可口可乐 Kěkǒukělè) meaning Delicious Cola did a far better job.
  3. Don’t ignore mass market
    Don’t just focus on the high end market. It’s small and there is enough opportunity to serve the mass market as well. On the other side, the mass market is HUGE! Also, the mass market is quickly getting able to spend more and more.
  4. Don’t support too many brands
    Because of the huge market, it will require a lot of money to achieve a certain well-known-ness for your brand. Additionally, brands are expandable in China, which means that you can reuse your brand for different product categories, leveraging the status it has achieved in a different market.
  5. Don’t start at the bottom
    Don’t start selling cheap, price competitive products to gain as much market share as possible. It will ruin the status of your brand. And you will never be able to restore that. Instead start with expensive, cool products, and accept that only the rich can buy them. Only in a next step introduce cheaper similar products, for larger target groups.
  6. Don’t go national on day one
    Large distances make distribution relatively hard. Make sure to dominate a local market first, limiting distribution challenges.
  7. Don’t give control to your Joint Venture
    “They will have you for lunch!”
  8. Don’t impose GLOBAL values
    You will not be able to get people to eat corn flakes with cold milk. Also don’t focus on individualism. It’s  is tempting, but also considered Eve’s apple. Respect Chinese values.
  9. Don’t become too Chinese
    Multinational products are aspirational. People are seeking to associate themselves with something international.
  10. Don’t ignore local insights!

The consultant surprisingly ended with one tip:

    China is “new”. A lot is changing in society and values. New insights are to be found constantly.